Skip to content
  • Categories
  • Recent
  • Tags
  • Popular
  • Users
  • Groups
Skins
  • Light
  • Cerulean
  • Cosmo
  • Flatly
  • Journal
  • Litera
  • Lumen
  • Lux
  • Materia
  • Minty
  • Morph
  • Pulse
  • Sandstone
  • Simplex
  • Sketchy
  • Spacelab
  • United
  • Yeti
  • Zephyr
  • Dark
  • Cyborg
  • Darkly
  • Quartz
  • Slate
  • Solar
  • Superhero
  • Vapor

  • Default (Simplex)
  • No Skin
Collapse
Cobens Direct
  1. Home
  2. Investments and Portfolios
  3. Fed rate cut 50bps

Fed rate cut 50bps

Scheduled Pinned Locked Moved Investments and Portfolios
11 Posts 4 Posters 124 Views
  • Oldest to Newest
  • Newest to Oldest
  • Most Votes
Reply
  • Reply as topic
Log in to reply
This topic has been deleted. Only users with topic management privileges can see it.
  • 2 Offline
    2 Offline
    2BToo
    wrote on last edited by
    #2

    Thanks Adam. Phe and pht have both done better in the last time couple of weeks but seem to have slipped back in the last few days, and look like they might be down again tomorrow.

    1 Reply Last reply
    0
    • D Offline
      D Offline
      dingg
      wrote on last edited by
      #3

      My crystal ball says massive up today, small up tomorrow closing the week on another weekly gain

      2 1 Reply Last reply
      0
      • A Offline
        A Offline
        Adam Kay
        Global Moderator
        wrote on last edited by
        #4

        Based on pre market 'everything' is up significantly. Whilst always nice to see green cf red our focus remains on the specific companies executing well, not so much on the daily or weekly market prices. Periods of consolidation are normal and healthy.

        Regards

        Adam

        1 Reply Last reply
        0
        • D Offline
          D Offline
          dingg
          wrote on last edited by
          #5

          All I know is that my fum had a stellar first 27 weeks of the year, breaking all my personal targets, the last 10 weeks just been treading water meh.

          Be good to have a decent boost before I take my annual chunk out, might be a struggle with the election playing its part in the background and I might have to take it to year end ie December for me

          1 Reply Last reply
          0
          • D dingg

            My crystal ball says massive up today, small up tomorrow closing the week on another weekly gain

            2 Offline
            2 Offline
            2BToo
            wrote on last edited by
            #6

            @dingg said in Fed rate cut 50bps:

            My crystal ball says massive up today, small up tomorrow closing the week on another weekly gain

            By 'today' do you mean the results which appear on the dashboard tomorrow?

            My results shown today are slightly down on the results shown yesterday, but my portfolio allocation will be different to yours.

            1 Reply Last reply
            0
            • D Offline
              D Offline
              dingg
              wrote on last edited by
              #7

              Yes, today will be stellar, show on tomorrow's read out

              Friday is opex, going to be volatile, closing just positive (he says optimistically)

              2 1 Reply Last reply
              0
              • A Offline
                A Offline
                Adam Kay
                Global Moderator
                wrote on last edited by
                #8

                Today's prices will be used for valuation purposes tonight and updated at around 9.30am tomorrow on the dashboard.

                The Fed released the rate cut at 7pm UK time last night. The indices closed down in the last 2 hours of trading which is not a reflection of the positive sentiment but rather, and you can imagine, there is always a lot of speculation around these announcements. Large institutions will have had hedges on given the coin flip between 25 vs 50 bps and also speculators would have been buying futures contracts to profit from the result. When the result is announced many participants will close out/cover those positions creating volatility immediately after. Price action is all about flow so it is no as simple as 'good news' = up and 'bad news' = down. It depends a lot on the derivative contracts purchased leading up to the event.

                1 Reply Last reply
                1
                • A Adam Kay

                  September 18 was a much-anticipated date, as many expected the Fed to lower interest rates for the first time since 2020. The key question was whether the cut would be 25 or 50 basis points. In the end, the Fed opted for a 50-basis-point reduction. Of the 11 voting members, 10 supported the larger cut, making the decision clear-cut.

                  One likely reason the Fed went with 50 basis points instead of 25 is that there are no FOMC meetings scheduled until November, making this the last opportunity to lower rates for some time. A smaller cut might have been insufficient, given the economic slowdown and the softening labour market. By choosing the larger cut, the Fed is giving itself more room to manoeuvre, especially since there’s no October meeting.

                  The Fed's updated projections, which will be revised quarterly, show some changes compared to June's outlook. For instance, the unemployment rate is now expected to reach 4.4% this year and remain there through 2025, before easing slightly to 4.3% by 2026. Previously, the Fed had predicted a more favourable 4.0% by the end of 2024 and 4.2% for 2025.

                  The Fed also anticipates GDP growth to remain steady at 2.0% annually, which is similar to their previous forecasts. On a brighter note, inflation is now projected to decline faster, with PCE inflation expected to drop to 2.3% this year and 2.1% in 2024, lower than the June forecasts of 2.6% and 2.3%.

                  Essentially, the Fed is predicting a slowdown in economic activity and a weaker labour market, which should help ease inflation pressures. As a result, they foresee interest rates falling to 4.4% by the end of this year, 3.4% next year, and 2.9% by 2026, down from earlier projections of 5.1%, 4.1%, and 3.1% respectively. This suggests that further rate cuts may be coming, possibly a 50-basis-point cut in November or two smaller 25-basis-point reductions spread between November and December.

                  Impacts and takeaways. Rates matter in the long term because at the end of every business transaction there is a consumer. Spending matters. However as we have espoused many times before, our focus is on the specific businesses we hold. Many of these have thrived in lower and higher rates environments. I think lower rates generally means cheaper capital and lets not forget that all asset classes compete against each other. As rates fall, investors will seek out better returns; equity vs debt. I would also expect lower rates to invigorate M&A activity.

                  Futures are up significantly at the time of writing

                  X Offline
                  X Offline
                  xera
                  wrote on last edited by
                  #9

                  @Adam-Kay said in Fed rate cut 50bps:

                  .....
                  Futures are up significantly at the time of writing

                  Adam thanks for sharing and the insight. I understood most of it but the sentence above and talk of futures always eludes me. Can you explain in layman terms what these futures are and why they matter up or down.

                  Thanks.

                  1 Reply Last reply
                  0
                  • A Offline
                    A Offline
                    Adam Kay
                    Global Moderator
                    wrote on last edited by
                    #10

                    Hi,

                    Interest rate futures being leveraged(interest rate futures) which will amplify the volatility. Stock options also being leveraged, will amplify the volatility on stocks, depending on flow

                    Regards

                    Adam

                    1 Reply Last reply
                    1
                    • D dingg

                      Yes, today will be stellar, show on tomorrow's read out

                      Friday is opex, going to be volatile, closing just positive (he says optimistically)

                      2 Offline
                      2 Offline
                      2BToo
                      wrote on last edited by
                      #11

                      @dingg said in Fed rate cut 50bps:

                      Yes, today will be stellar, show on tomorrow's read out

                      Friday is opex, going to be volatile, closing just positive (he says optimistically)

                      You are of a more optimistic mindset than me! Or (much more likely) you simply have different portfolio allocations.

                      For me, Thursday (i.e results shown on Friday) was decent but not huge. And Friday (results shown on Saturday) was slightly down.

                      Hoping for big things on Monday (Tuesday's results), but then I hope for that every day! 😊

                      1 Reply Last reply
                      0
                      Reply
                      • Reply as topic
                      Log in to reply
                      • Oldest to Newest
                      • Newest to Oldest
                      • Most Votes


                      The value of your investments can go down as well as up, and you may get back less than you invested.

                      Cobens a trading name of Astute Financial Management UK Limited is authorised and regulated by the Financial Conduct Authority. Registered Address: 4th Floor Peek House, 20 Eastcheap, London, EC3M 1EB. Registered in England and Wales No. 5850981.

                      • Login

                      • Don't have an account? Register

                      • Login or register to search.
                      • First post
                        Last post
                      0
                      • Categories
                      • Recent
                      • Tags
                      • Popular
                      • Users
                      • Groups